Why Inequality Matters • Hacker News Board

Re: Why Inequality Matters

#21

Post by TheIronYuppie » Thu, Oct 16, 2014, 1:42 PM UTC

penprog wrote: post #18

Why would we want to tax consumption of the wealthy (or anyone)? Don't we want to promote spending? The tax code should reward those that make investments, purchases, and donations. Not punish them. They should punish those that sit on their wealth and do nothing with it.

The idea is that just having money does no one any good. You want to spend it on stuff. Further, having an estate tax caps that accumulation at the end of your life. There may be people who truly don't spend any money, but that would be the minority.

Re: Why Inequality Matters

#22

Post by yequalsx » Thu, Oct 16, 2014, 1:42 PM UTC

r0h1n wrote: post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

The problem with relying, even partially, on philanthropy to correct some of the imbalances of capitalism is that one encounters the free rider problem. There is also the issue where a very wealthy person has as their philanthropic cause something which few others think is a good choice of philanthropy. Such decisions should be made by society as a whole through their elected representatives.

I know this wasn't the main point of your post. Overall I agree very much with what you wrote. Especially your points on taxing labor vs. capital and your point on estate taxes. Even Reagan thought the tax on capital ought to be higher than the tax on labor.

Re: Why Inequality Matters

#23

Post by Joeboy » Thu, Oct 16, 2014, 1:42 PM UTC

> I think we’d be best off with a progressive tax on consumption

In theory I like the idea of a "tax on consumption", because it suggests a penalty on conspicuous consumption and wasteful spending. In practice, taxes on consumption are seen as regressive, ie. they affect the poor more than the rich. Is there a way to tax "bad" consumption, without penalizing people who "consume" a large proportion of their income simply because they don't have much of it? I'm picturing some byzantine tax code system where functionaries make value judgements about the morality of various kinds of goods.

Re: Why Inequality Matters

#24

Post by bsbechtel » Thu, Oct 16, 2014, 1:43 PM UTC

zdw wrote: post #20

bsbechtel wrote: post #12

>High levels of inequality are a problem—messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal. I agree with generally all of Gates' thoughts here, but there are two actors to consider when discussing how to address problems associated with inequality - the government, and those who own capital. There is an implicit assumption…

WRT Common Core, I don't think Gates is doing it to serve some personal benefit - I get that his work with that, and things like Malaria reduction are genuinely motivated by trying to improve the world. The problem is that it's one man's perspective vs. a whole world of reality, and as such the model might not fit and in some areas cause more problems than good. So you end up with a multi-billionare like Gates being…

>The problem is that it's one man's perspective vs. a whole world of reality

This was the point I was trying to make. I agree I don't think in this case he's trying to serve his own personal benefit. However, given he used his money to to implement a program he wanted, it just demonstrates the opportunity exists to use your wealth to push programs that are to your own benefit.

Re: Why Inequality Matters

#25

Post by protonfish » Thu, Oct 16, 2014, 1:46 PM UTC

r0h1n wrote: post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

I'm no supply-side economist, or advocate of Brave New World consumerism, but I believe that taxing the purchase of actual consumer products would not have a positive effect on the economy of the country. I believe a healthy economy is an active one. An incentive to remove money from active circulation (hoarding) could have long-term negative repercussions. And a country where the government encourages the average person to survive on hand-outs (philanthropy) over jobs (consumer spending) is sick morally as well as financially.

Re: Why Inequality Matters

#26

Post by akmiller » Thu, Oct 16, 2014, 1:46 PM UTC

penprog wrote: post #18

Why would we want to tax consumption of the wealthy (or anyone)? Don't we want to promote spending? The tax code should reward those that make investments, purchases, and donations. Not punish them. They should punish those that sit on their wealth and do nothing with it.

Spending doesn't do as much as starting or investing in new companies or even philanthropy itself.

Gates and Pickety agree on the estate tax which would help for people trying to sit on their wealth and simply pass it along to their heirs. Of course the estate tax needs some improvements.

Re: Why Inequality Matters

#27

Post by [deleted] » Thu, Oct 16, 2014, 1:47 PM UTC

TheIronYuppie wrote: post #21

penprog wrote: post #18

Why would we want to tax consumption of the wealthy (or anyone)? Don't we want to promote spending? The tax code should reward those that make investments, purchases, and donations. Not punish them. They should punish those that sit on their wealth and do nothing with it.

The idea is that just having money does no one any good. You want to spend it on stuff. Further, having an estate tax caps that accumulation at the end of your life. There may be people who truly don't spend any money, but that would be the minority.

[deleted]

Re: Why Inequality Matters

#28

Post by seren » Thu, Oct 16, 2014, 1:48 PM UTC

Joeboy wrote: post #23

> I think we’d be best off with a progressive tax on consumption In theory I like the idea of a "tax on consumption", because it suggests a penalty on conspicuous consumption and wasteful spending. In practice, taxes on consumption are seen as regressive, ie. they affect the poor more than the rich. Is there a way to tax "bad" consumption, without penalizing people who "consume" a large proportion of their income sim…

Well in theory, you could have a progressive tax on consumption, i.e. basic subsistence item have a low VAT, while luxury goods have a higher rate. This is already in application in some countries, but this is rather crude and does not take into account what you are using the item for. For example, electricity to heat your single room apartment has the same tax rate than the one used to heat your Olympic pool when it's freezing outside.

Re: Why Inequality Matters

#29

Post by [deleted] » Thu, Oct 16, 2014, 1:48 PM UTC

akmiller wrote: post #26

penprog wrote: post #18

Why would we want to tax consumption of the wealthy (or anyone)? Don't we want to promote spending? The tax code should reward those that make investments, purchases, and donations. Not punish them. They should punish those that sit on their wealth and do nothing with it.

Spending doesn't do as much as starting or investing in new companies or even philanthropy itself. Gates and Pickety agree on the estate tax which would help for people trying to sit on their wealth and simply pass it along to their heirs. Of course the estate tax needs some improvements.

[deleted]

Re: Why Inequality Matters

#30

Post by wes-exp » Thu, Oct 16, 2014, 1:50 PM UTC

sharemywin wrote: post #11

This is where it gets complicated for me. Gates value judges the rich person spending money on a yacht and plane. Planes and yachts are pretty complicated gadgets that employ a lot of engineers and others. The plane makers technology might even contribute to some other kind of businesses similar to the space program in the sixties and seventies. Where as tech companies sitting on piles of cash because they don't know…

Employment is all good and well, but one needs to consider: what are the second-order effects of that action? For instance, you could employ people to dig holes that serve no purpose. Or, you could employ people to build public infrastructure that continues to pay dividends over its lifetime.

Buying the yacht is a little bit like digging useless holes, because it's basically a very costly form of recreation that doesn't do much for society. Ideally, money goes into things that both employ and have desirable second-order effects.